🔒 WEBINAR: Markets decide to ignore Trump tweets, global portfolio up 32% annualised

JOHANNESBURG — The Global Portfolio found a second wind in May with seven of the nine holdings experiencing material gains and the other two level pegging. As a result, the value of the portfolio rose $25 000 from its April level to a new peak of $358 180, a 24% gain on May 2017. In Rand terms, the portfolio is now worth R4.47m, up from R3.73m in May 2017. Annualised growth since the launch in December 2014 is 32%. A major feature of the past month has been the US stock market’s growing disdain for erratic news flow from the White House. Investors now appear to be ignoring statements from the Trump Administration. As a result of the many retractions and backdowns from some outrageous initial positions, the market is now interpreting Trump’s statements as negotiating positions, rather than expressions of policy. The portfolio received a dividend of $187.61 on its stake in Apple, which declared a 73c a share quarterly dividend, up from the 63c paid in the previous four quarters. This receipt increased the cash holding to $13 998. No other changes were made to the portfolio, whose members Amazon, Microsoft and Alphabet were included in the Morgan Stanley Top 30 stocks for 2018. – Alec Hogg

Highlights of the past month:

Amazon.com – The power of Jeff Bezos’s business model is becoming increasingly apparent, not just in the US but also now in developing markets. The way Amazon is hurting its major US rival was illustrated through the Walmart purchase of control of Indian ecommerce group Flipkart in the world’s biggest retail deal ever. It is a huge bet by Bentonville in a country of 1.3bn people which is currently dominated by the Mom n Pop stores (kiranas) which hold 90% of the market. Since opening up in the country in 2014, Amazon has grown its share of the Indian online retail market from 10% to 27%. Flipkart is still the market leader, but its share of the online retail cake has contracted from 38% to 34%.
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Amazon’s price rose $150 a share in the month adding $7 500 to the value of the portfolio.

Alphabet – The holding company of Google recovered strongly on good news on its dominance in its major revenue area, online advertising. According to official US figures, online advertising exceeds that on television for the first time. Google’s dominance of this area is reflected in the fact that Search and YouTube own 44% of the global market (despite not being exposed to China).

Alphabet’s share price rose $54 a share in the month, adding $3 000 to the value of the portfolio.

Apple Inc – The company’s share price rose 13% in a single week following quarterly results which easily outpaced Wall Street’s depressed expectations, and a ringing endorsement at the Berkshire Hathaway AGM from Berkshire chairman Warren Buffett. Berkshire acquired a further 75m Apple shares in the first quarter of 2018, raising its holding to 240m shares, worth $45bn. Apple got some welcome news from the courts where it was awarded damages of $539m in a licensing lawsuit against Samsung.

Apple’s share price rose $23 in the month, adding almost $6 000 to the value of the portfolio.

Tencent – The Chinese internet company in which South Africa’s Naspers owns 31%, delivered a set of results that easily beat market expectations in the first quarter of 2018. It has also disclosed that the streaming music arm is aiming at an IPO in the second half of 2018. On a line through the valuation afforded recently listed Spotify, analysts expect Tencent Music will be worth $25bn – double the value of a year ago.

Tencent’s share price rose HK$20 in the month while the other Chinese internet company owned, Alibaba, rose US$25 in the month, adding materially to the portfolio’s improvement.

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